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Who's Business Model is Best for America---California or Texas?

by Jim Forsyth

Governor Perry has been taking pot shots are other states lately, suggesting last week that the governors of the other 49 states are 'jealous' that they are not the governor of Texas, and touting the state's surging economy and top ranked business climate.

Now, one of the governors who Perry has been tweaking is fighting back, laying the groundwork for a war of ideas between Texas and California over which state's model is better suited to the 21st Century.

California Gov. Jerry Brown blasted Texas for having 'ten to eleven percent of working people working at or below the minimum wage.'

"That devastates families," Brown said.

Brown went on the challenge Texas' lack of 'investments' and even suggesting that Texas' debt burden is 'too low.'

Texas' debt burden per capita is one fifth that of California.

"They're doing well in manufacturing, they're doing well in investing in wind," Brown told the radio program 'Marketplace Morning.' "Maybe they have a lower debt. Maybe their debt's too low. Maybe they should be investing in the kinds of innovation and technology that will serve their citizens in the future."

The conservative Texas Public Policy Foundation was quick to respond to Brown's claims.

"Gov. Brown's contention about 'ten or eleven percent' of all Texas workers earning at or below the minimum wage is a stale meme that was debunked long ago," said TPPF Vice President Chuck DeVore, who is, ironically, a former member of the California Legislature. "The New York Times columnist Paul Krugman trotted out this falsehood only to correct it about a week later."

DeVore points out that while overall wages in Texas are in fact 'slightly' lower than in California, the cost of living is significantly lower, from the cost of a home to the cost of bread in California's unionized supermarkets.

"The economic and financial outlook for Texans is much better than for the average Californian," DeVore said. "In fact, a worker earning the minimum wage in Texas can buy far more goods and services than his counterpart in California."

TRRF Senior Fiscal Policy Analyst James Quintero also took issue with Brown's remarks.

"The Governor's throwing around of the term 'investing' is nothing more than code for big government spending, the net effect of which has made the average Californian poorer," he said. "One needs only to look at the government's own data to see this. A quick look at the Census Bureau's Supplemental Poverty Index shows that from 2009-2011, California had a poverty rate of 23.5%, the highest in the nation and significantly higher than in Texas, even though both states have very similar demographic profiles. This shows which approach in governing, bit government or smaller government, is most conducive to prosperity and lifting people out of poverty."